Abandoned homes in Japan
5' read - published December 12th, 2022
Japan has a problem, one that foreshadows the future of many developed countries - that is abandoned housing, both in rural and urban areas. In Tokyo itself, 1 in 10 homes sits empty. The problem will continue to worsen, and by 2023, there would be an estimated 11 million unoccupied housing. Unoccupied housing is also known as “akiya” (空き家 - it literally means unoccupied, but often it is eventually abandoned, thus the word is used for both senses).
While the Japanese are well aware of the problem, and that they came up with a diverse set of possible solutions, they are only enough to slow down the process. For any initiatives to succeed, cooperation between the homeowners, the real estate professionals and the government is needed. The involvement of multiple stakeholders poses quite a challenge and delays decision making.
While it is easy to define the problem, understanding what causes it is not as clear cut, because multiple factors contributed to it. In this article, 3 major factors are explored, followed by the mention of current solutions, and the challenges that are present.
Causes
The number one reason, and still is a contributing factor, is the continuous construction of new housing in Japan despite a shrinking population. Take Tokyo for example, the population has increased by more approx. 3 millions since the 2000s. As the demand for housing increased, prices sky-rocketed. The government sought to tackle this problem by building more houses, the higher the supply, the lower the price, simple economics. In fact, the strategy worked. The average housing prices have decreased since 2006. What they did not account for at that time is the aging and shrinking population. Now close to two decades later, the exemplary solution is starting to see cracks.
Besides that, houses can become abandoned when the owners die without naming an inheritor; or in a more complicated situation, having multiple inheritors but they are not on terms with one another, thus blocking any further process on the property.
A third reason that is rather common is that these houses are located in rural areas far away from major cities. People are reluctant to move there.
Government solutions
The government tried to battle this creeping problem. They categorized vacant houses into 2 categories: those that are intended for rent or sale, and the rest. To deal with abandoned housing that falls into “the rest” category, new real estate registration laws have been implemented. Some of the new laws include:
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Fines for property owners who failed to register an inheritor in the event of their death.
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The transfer of title of an abandoned property to the government should the need arise.
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Make vacant homes available for rent to the low income group and/or to single seniors.
Demolishing the abandoned housing is also considered, yet not without some roadblocks. The abandoned houses are a hazard and pose a threat to the local community in case of a natural disaster. These houses may be built with wooden foundations, as the years go by the structure has weakened. In the event of a natural disaster or fire, the damage is spread to the nearby buildings as well. Not only that, it is a hygiene and termites concern. The demolition cost is to be borne by the owners, but it is difficult to track them down. Sometimes it is because they moved away, others simply do not want to acknowledge ownership of the property because of tax liability. Without proper clearance, the government could not do anything. Therefore, the abandoned property remains as is.
Private sector solutions
What else can be done? Private construction companies, real estate agencies, and startups have chipped in their proposals, which can be divided into ownership and conversion.
Ownership
In the ownership category, real estate consulting company Akiya & Inaka specializes in vacant housing in rural Japan. They serve three types of clients, namely buyers, investors and sellers. They propose full A-Z service to help clients find the right akiya (unoccupied house), navigate the different rules and regulations, as they are governed differently from properties in the normal real estate market, and marketing services when necessary.
Another solution that is “technically free” is Everyone’s Zero-Yen Property (Minna no Zero-en Bukken). It is a free property exchange platform between owners of akiya (unoccupied house) and interested owners. Owners list their property, while the interested parties browse and select one that meets their needs, an exchange then takes place. The property is exchanged at 0 Yen, but the new owner (who has acquired the akiya) will have to bear other expenses such as administrative fees, taxes, renovation and insurance costs. While for the previous owner, they no longer have to pay for property tax, that is one less expense for them.
Conversion
In the conversion category, some homeowners have converted their own akiya (unoccupied house) into AirBnB, guesthouses and cafes to name a few. On the other hand, some others had difficulty in obtaining sufficient financing to refurbish the property, thus startups, construction companies and even the community have stepped in to fill the role.
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ADDress is a startup that proposes an innovative business model to respond to this problem. They offer a subscription service that allows subscribers to live in more than 220 locations nationwide from 44 000 Yen per month in the managed akiya nationwide.
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The community in the city of Wajima decided to revitalize a centrally located district that houses a number of akiya. They teamed up with Bussi-En - a social welfare service corporation, to create a city centered on “people”. The rejuvenated area attracts local residents both young and old, giving life to a once declining city.
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JectOne, a construction company, has established a subsidiary named Akisapo that focuses on akiya. Akisapo rehabilitates properties and transforming them into income-producing assets on behalf of the owners. Owners do not bear the financial burden of the transformation, the cost of renovation is reimbursed through a portion of the rent. When the renovation costs are recovered, the owner is free to rent out the property and receive 100% of the income.
Challenges
Despite all the efforts from the government and the private sector, the road to solving abandoned housing problem is paved with challenges.
Akiya banks are the most comprehensive directory for all the akiya in Japan, however depending on the municipality, some have a better database than others. Some Akiya banks are run by municipal staff, who have no knowledge of real estates nor web designs. They still use outdated methods such as fax. There is no surprise here when it comes to the subpar completeness of records.
As mentioned earlier, some akiya are located in rural areas. The location does not appeal neither to the younger generation nor families from urban areas because there are no promising employment opportunities. Beside that, the long commuting time to major cities also constitutes to the lack of attractiveness of rural akiya.
The idea to sell akiya to foreigners is a possibility, but it does not mean an automatic residence status. On top of that, they have to live in the house permanently.